As a business owner, you know how complex the considerations surrounding insurance can be. Part of getting the most out of your insurance coverage is knowing how to balance your personal and commercial insurance. As a result, a common question many business owners have is whether to place your vehicle on your personal insurance policy or a commercial insurance policy.
The short answer is that it depends. Finding the appropriate auto insurance coverage can be tricky if you drive your personal vehicle to business meetings or take your company car home at night and drive the kids to baseball games on the weekends.
Take a closer look at what goes into this decision and why talking to a reputable commercial insurance agency is key.
What Is Commercial Auto Insurance?
Commercial auto insurance is similar to personal car insurance but with different provisions on who can be covered and what exclusions and limits apply. A commercial auto insurance policy typically has these components:
- Collision and comprehensive coverage
- Bodily injury, property damage, uninsured motorist, and underinsured motorist coverage
- Medical payments, towing and labor, rental reimbursement, loan and lease gap coverage
Commercial auto insurance can be written narrowly to cover just one vehicle. Alternatively, a policy can be written broadly to cover all of your automobiles, including cars, vans, trucks, and any other vehicles owned by your company.
Commercial Insurance vs. Personal Insurance
Both commercial auto insurance and personal auto insurance can safeguard your financial well-being and that of your business, as well as protect you from lawsuits and liability for injuries and damages from an accident. However, a commercial auto policy typically has higher coverage limits and can tackle more complex legal issues.
To decide which is right for your situation, consider these key factors:
Ownership
Is the vehicle in your name or the name of your business? You must purchase commercial insurance if the vehicle is owned by your business. You will not be able to get personal coverage for a vehicle owned by a business.
Drivers
If you and your employees drive the vehicle for business, a commercial auto insurance policy may be needed. You can buy a commercial insurance policy that covers your vehicle and all your employees. If you are a sole proprietor and only commute to work, you may be able to get by with personal auto insurance.
Vehicle Type and Weight
A heavy-duty vehicle can cause more damage than a pickup truck or SUV. If you have dump trucks, semis, and commercial trailers, you must buy commercial auto insurance. An insurer may require higher limits — often $1 million with a $500,000 minimum — that are unavailable under a personal policy.
While you may need commercial insurance for certain vehicle types, this doesn’t mean you will also have to secure a personal insurance policy. If you have a commercial auto policy for a vehicle used for work and pleasure, you may be covered without purchasing a separate personal auto policy.
Hired and Non-Owned Auto Insurance
Commercial vehicle insurance can cover the personal use of a company-owned vehicle, but the reverse is not typically true. Some insurers may allow limited business use under your personal insurance. However, if you use your personal vehicle for business purposes and end up in an accident, insurers may deny your claim.
You may need to turn to hired and non-owned auto insurance (HNOA) if your employees often use their personal vehicles for work. HNOA insurance can give you or your employees liability coverage for accidents that happen in your personal car on a work assignment. It also can cover vehicles your company rents or leases.
Running errands for business, driving to business meetings, picking up supplies for your company, or dropping off papers for your business on your way home, can all count as business uses that may require you to consider commercial insurance for you and your employees.
Cost of Commercial Auto Insurance
In general, commercial auto insurance costs more than personal auto insurance because of the higher limits. The average cost of commercial auto insurance can vary depending on various factors such as your industry, your employee’s driving records, and the coverages you select.
Here are additional factors insurers consider for pricing commercial auto insurance:
- Types of vehicles
- Number of vehicles
- Frequency of use
- Policy limits
- Claims history
Premiums for commercial insurance are specific to your company. Insurance for the same vehicles you use in your company can be priced differently for another business.
Consulting a Commercial Insurance Agent Is Crucial
Talking to a commercial insurance agent with Garrett Insurance can help you discover which policy is best for your needs. A commercial insurance agent asks a series of detailed questions, including who drives your vehicle and whether you own, rent, or lease it.
By evaluating your specific situation, the agent can make recommendations that protect both your business and your pocketbook.
Find Commercial Auto Insurance Today
If you drive your vehicle mainly for personal trips, your personal auto insurance policy may provide the right coverage. But if you need coverage for employees to drive the vehicle or higher liability limits, you may need commercial insurance.Ready to learn more about securing the right coverage for you and your business? Garrett Insurance is an independent personal and commercial insurance agency based in Kansas and Texas. Contact us to get started today.